GM clinches $11 bln credit facility amid Opel overhaul

GM clinches $11 bln credit facility amid Opel overhaul

DETROIT: General Motors Co. secured an $ 11 billion revolving credit facility, more than doubling its financial cushion and further strengthening the balance sheet of the largest US automaker.
The additional liquidity comes as GM works to stanch losses at its Opel brand in Europe. GM recently said it was aiming to break even in Europe by the middle of the decade.
The new credit facility replaces a $5 billion line the company secured more than two years ago in the run-up to its initial public offering in November 2010.
The $ 11 billion facility offers better terms as well as the ability to borrow in currencies other than the US dollar, GM said in a statement.
“The new revolver provides a significant source of backup liquidity and financial flexibility, further bolstering our fortress balance sheet,” Chief Financial Officer Dan Ammann said.
The deal gives GM a credit facility comparable to those of other companies close to its size, GM spokesman Dave Roman said. Ford Motor Co, the No. 2 US automaker, boosted its credit facility to $ 9.3 billion earlier this year.
GM’s new credit line consists of a $ 5.5 billion three-year facility and another $ 5.5 billion that matures in November 2017. Its earlier $ 5 billion facility would have matured in 2015.
GM Financial, GM’s in-house finance company, can borrow under the facility.
Thirty-five banks from 14 countries participated in the facility. Ammann said this signaled the financial community’s confidence in GM’s financial condition.
Earlier this year, GM was seeking a credit facility of as much as $ 10 billion, according to people familiar with the matter.
The US presidential race has repeatedly thrown GM into the spotlight, spurring debate about the effect of the company’s 2009 bankruptcy restructuring.
The US government poured $ 50 billion into GM during the financial crisis to help the one-time blue chip avoid liquidation. The US Treasury nearly halved its GM stake during GM’s IPO but still owns 500 million common shares.

Zimbabwe devalues currency to tackle economic crisis

Zimbabwe adopted the dollar in 2009 but introduced a parallel system of bond notes that it pegged at 1:1 to the US currency

Updated 4 min 7 sec ago

Reuters

February 22, 2019 11:41

0

HARARE: Zimbabwe’s central bank began trading a sharply discounted replacement currency on Friday, attempting to ease a cash crunch that has hobbled the economy and plunged millions deep into poverty.Zimbabwe adopted the dollar in 2009 but, as a chronic hard currency shortage worsened, introduced a parallel system of bond notes that it pegged at 1:1 to the US currency.Effectively reintroducing a national currency, the Reserve Bank of Zimbabwe (RBZ) said on Wednesday it would carry out a “managed float” of the surrogate, which fetches far less than a dollar on the black market.The bond notes and electronic dollars, locked in individuals’ accounts for months due to a lack of cash, will be merged into a separate currency called RTGS — or real-time gross settlement — dollars, the central bank said.It sold US dollars to banks at 2.5 RTGS dollars on Friday morning, Bank Governor John Mangudya told business leaders.Commercial banks reopened on Friday after a bank holiday, but with exchange facilities from bond notes to US dollars at the same 2.5 rate limited to individual and corporate holders of foreign currency accounts, queues outside appeared to be no longer than usual.Other members of the public should, in theory, be able to go to banks on Monday and buy US dollars with bond notes or electronic dollars.But it is not clear how many US dollars the central bank, which only has enough foreign exchange for two weeks of imports, has sold to banks.The bond notes and notional electronic funds have plummeted on Zimbabwe’s black market in recent months to around 4 per dollar.Many foreign traders have stopped accepting bond notes as legal tender, leaving businesses such as millers, brewers and miners hamstrung.Economists cautiously welcomed the central bank’s decision to allow its currency to devalue.The RBZ hopes its new measures will temper demand for dollars on the black market and ease inflation as the new currency settles at fair value.